TORONTO, Feb. 3 /CNW/ – Institutional Mortgage Capital Canada Inc. (“IMC”) is proud to announce it has completed a private placement of commercial mortgage backed securities (“CMBS”) with an aggregate principal balance of C$206,000,000. The transaction is the first CMBS deal issued in Canada since 2007. The deal, entitled Institutional Mortgage Securities Canada Inc., Series 2011 (“IMSC 2011-1”), is backed by 16 loans to two of Canada’s largest REITS, RioCan REIT and Calloway REIT. The certificates were issued by Institutional Mortgage Securities Canada Inc., an affiliate of IMC, with TD Securities as the Lead Placement Agent.

“IMC is doing its part to help re-open the Canadian CMBS market,” said IMC President and founder, John Ho. “It’s unfortunate that the Canadian market has lagged behind the US when Canadian bonds performed extraordinarily well even after 2007. Where US CMBS is experiencing 10% defaults, Canadian CMBS has had virtually 0% losses on the $24 billion of CMBS issuance over the past 13 years.”

“IMC plans to issue future CMBS deals in 2011 and expand our marketing to the US and international investors seeking the stability of Canadian credit,” says Mr. Ho. “We think this will expedite the return of the Canadian CMBS market and make it more efficient this time around.”

IMSC 2011-1 is comprised of six investment grade classes and one weighted average coupon interest only certificate (“WAC IO”). The certificates were rated AAA to BBB in the DBRS pre-sale report released on January 21, 2011. The AAA certificates have a 16.75% subordination level with fixed pass-through rates of 3.690% for the 5 year class and 4.697% for the 10 year class. The AA certificates have a pass through rate that is the lower of 5.259% and the net weighted average coupon (“NWAC”) of the underlying mortgage portfolio while the A, BBB+, and BBB rated certificates have NWAC pass through rates. All classes below the 5 year AAA have expected maturities of February 12, 2021, including the AAA rated WAC IO.

The underlying collateral for IMSC 2011-1 is comprised of 16 loans that are backed by anchored retail shopping centres owned by RioCan REIT and Calloway REIT, who are the dominant retail players in the Canadian landscape. Anchor tenants include national retailers such as Walmart, Shoppers DrugMart, and Rona. The loans have a 10 year term and a 30 year amortization schedule with fixed rate coupons. They are full recourse to each borrower, guaranteed by their respective REIT sponsor and do not allow for borrower prepayments.

About Institutional Mortgage Capital Canada Inc.

Since inception in June 2009, IMC has raised over $320 million in capital from institutional and high net worth investors for investment in Canadian CMBS and Canadian commercial mortgage loans. IMC also established Institutional Mortgage Servicing Canada Inc. (“IMS”), a fully operational servicing company with over C$750 million of servicing assignments. While previously working together at Merrill Lynch, the IMC team built the first commercial mortgage backed lending program and managed 28 of the 65 Canadian CMBS conduit transactions from 1997-2007. IMC looks to focus on commercial mortgage origination and new CMBS issuance in the future.